The Volcker Rule was enacted in Dodd-Frank and prohibits bank and bank affiliates from engaging in proprietary trading, but includes a series of exceptions from the rule. The proposed rule would, however, have construed the municipal bond exception very narrowly and effectively only exempted general obligation bonds. The Rule also exempts market-making and underwriting activities, but again with restrictions that make it very difficult to meet the exemptions. The Rule also prohbits bank from investing in “covered funds”. This provision is aimed at hedge funds, but also includes tender option bond trusts.
Find the full comment letter [here.]
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